Tag: Global Value Chains

Car mechanic in uniform checking car in automobile
Africa, Building resilience

It’s time to develop better automotive value chains in Africa

By Dave Coffey, Chief Executive Officer · AAAM[i] – African Association of Automotive Manufacturers

Where is the last frontier for significant automotive development and growth in the world? It’s Africa. The challenge then is, how can local skills and raw materials be better allocated to balance contributions to global supply chains and Africa’s own industries?

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Development Matters
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Africa, Building resilience

Why stronger regional value chains can help Africa rebound from economic shocks

By Yeo Dossina, Head of Economic Policy and Research, African Union Commission, Arthur Minsat, Head of the OECD Development Centre’s Unit for Africa, Europe and Middle East and Rodrigo Deiana, Consultant, OECD Development Centre

Africa’s value chains hold the key to unlocking its productivity, deepening its economic integration, and strengthening its resilience to shocks. Yet regional value chains accounted for just 2.7% of Africa’s total value chain participation in 2019, compared to 26.4% in Latin America and the Caribbean and 42.9% in developing Asia according to the latest edition of Africa’s Development Dynamics, a joint report by the African Union Commission and the OECD Development Centre.

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Development Matters
Africa, Building resilience

How Africa can move up the value-chain

By John Stuart, tralac Associate[1]

Africa is a resource-rich continent, specialising in fuel, mineral and agricultural exports. Statistics on revealed comparative advantage (RCA) show that Africa exports proportionally more primary products than most other regions. Crude materials, which include ore, metal, wood, cotton and other raw textiles, are the continent’s dominant product category, followed by tobacco, various agricultural products and fuel. One consequence of specialising in primary product exports is that other countries get to enjoy the benefits of the value they add to these raw materials. These benefits can range from higher profits for their corporations to a more diversified industrial base and consequently better insulation from economic shocks, as well as a more highly skilled, higher-earning workforce.

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Development Matters
Africa, Building resilience

Value chains in Africa: what role for regional trade?

By Eyerusalem Siba, Economist and international expert in private sector development, spatial industrial policies and sustainable urbanisation

The Covid-19 pandemic and associated containment measures hit businesses hard, exposing them to record levels of uncertainty, disrupting value chains, and reversing countries’ hard-earned progress in economic and social development. The knock-on effects of these disruptions on GDP, foreign direct investment (FDI), trade and industrial production have been highest among globally integrated economies that have smaller domestic markets, rely heavily on vulnerable sectors and have limited capacity to adjust.

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Development Matters
Asia, Building resilience

Risk, resilience and recalibration in global value chains

By Adnan Seric, Michael Windisch, UNIDO, Holger Görg, Wan-Hsin Liu, Kiel Institute for the World Economy 1

COVID-19 supply chain disruptions provide an unprecedented opportunity to examine the resilience of global value chains. Data on trade flows and manufacturing output over the course of the pandemic suggest that the supply chain disruptions of early 2020 were of a temporary nature, and that extended global value chains currently interlinking many firms and economies seem to be resilient to trade and economic shocks at least to some extent.

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Development Matters
Building resilience

Regional integration does not ensure production in value chains

By Renato Baumann, Co-ordinator, International Co-operation, IPEA, Brazil

Developing economies often face a common challenge: after a period of rapid growth they experience a slowdown in both growth and productivity, falling into what has come to be known as the ‘middle-income trap’. Signing preferential trade agreements and participating in global value chains are two common recommendations presented to countries facing the middle-income trap, and are often seen as intertwining processes. Moreover, regional integration is gaining momentum as an enabler of value chains. However, although regional movement of goods facilitated by regional integration might be necessary, it is not the only condition to ensure production in value chains.

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Development Matters
Building resilience, Covid-19, Trade

Localisation of production: COVID-19’s medium-term impact

By Dr Linda Yueh, Economist at Oxford University, London Business School, and LSE IDEAS, and author of “The Great Economists: How Their Ideas Can Help Us Today”

This blog is part of a series on tackling COVID-19 in developing countries. Visit the OECD dedicated page to access the OECD’s data, analysis and recommendations on the health, economic, financial and societal impacts of COVID-19 worldwide.

shutterstock_465773663The immediate shock of the COVID-19 pandemic on world trade and investment is apparent in the latest report of the World Trade Organisation (WTO), which expects global trade to fall by an unprecedented 13 to 32 per cent this year.

The WTO points out that all regions will experience double digit declines in trade, which will be worse than during the global financial crisis a decade ago. The global trade body also stresses that there will “steeper falls in products with complex supply chains, such as electronics and automobile products.” This underscores that COVID-19 is both a “supply shock” and a profound demand shock. Finally, the WTO expects a recovery in trade volumes is possible in 2021, but it will depend on the extent of the pandemic and the effectiveness of policy measures to address the shock.

Even as global trade might recover within a year, there are potential medium-term effects from the COVID-19 pandemic, notably, around supply chains and associated cross-border investment. It’s challenging to map out the impact of COVID-19. But the supply chain disruptions are on the back of a tense period of trade restrictions and during a time when additive manufacturing (i.e., 3-D printing) have contributed to an emerging trend towards greater localisation of supply chains.
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Development Matters3 Comments
Building resilience, Policy

The future of manufacturing and development: three things to remember

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By Annalisa Primi, Head, Structural Policies and Innovation, OECD Development Centre 

To learn more about countries’ strategies for economic transformation, follow the 10th Plenary and High-Level Meeting of the OECD Initiative for Policy Dialogue on Global Value Chains, Production Transformation and Development in Paris, France on 27-28 June 2018

shutterstock_444327613Not all factories are the same. Today, their differences are bigger, more impressive and carry far-reaching implications for development in developing economies. Since the 1970s, industrial production has been organised in complex, multi-country networks of suppliers and providers. The conventional expectation was that this trend would be conducive to growing homogeneity, with converging techniques of production, salaries, standards and business organisation in the “world factory” system. However, as things do not often go “by the book”, manufacturing today encompasses far different realities. China has become the world’s leading manufacturing country. Early industrialisers have built complex value chains, delocalising non-core manufacturing activities to developing economies with relatively lower labour costs and growing domestic markets. The result: manufacturing is a collection of deeply different systems. And differences exist even within the same sector. Just look at the textiles industrial parks in Ethiopia that manufacture for and export fast fashion brands, such as Spain’s Zara. Or look at the robot-powered, fully automated smart factory of Adidas in Germany, which has been making customised mass production of textiles a reality in Europe since 2016. Consider the artisanal, luxury, on-demand, tailor-made production of Lamborghinis in Emilia Romagna, the highly automated export-oriented Audi production in Mexico, and the vertically integrated, only partially automated, domestic market-oriented BYD electric vehicle factory in Shenzhen, China. Continue reading “The future of manufacturing and development: three things to remember”

Development Matters7 Comments
Building resilience, Human Development, SDGs, Youth

Turning a commitment into actions

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By Mario Cerutti, Chief Institutional Relations & Sustainability Officer, Lavazza Group

To learn more about countries’ strategies for economic transformation, follow the 10th  Plenary Meeting and High-Level Meeting of the OECD Initiative for Policy Dialogue on Global Value Chains, Production Transformation and Development, in Paris, France on 27-28 June 2018.

logo TOward2030At the beginning of 2017, Lavazza launched ‘’Goal Zero’’ – a call to collective action amongst our many stakeholders to pursue the 17 Global Goals of Agenda 2030 for Sustainable Development. The company decided that co-operation, instead of going it alone, is fundamental for any significant results. Still, we faced the question of how to engage different stakeholders in one all-encompassing plan. For Lavazza, answering this means engaging our different stakeholders – employees, youth, suppliers and the surrounding community – using tailored communications tools. We believe that only a strong commitment originating from within Lavazza can, in turn, fuel external communications. So, here’s how we are proceeding:
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Development Matters
Building resilience

Lessons learned from structural transformation in least developed countries

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By Daniel Gay[1], Inter-Regional Adviser on LDCs, UN Department of Economic and Social Affairs

Find our more about the OECD Initiative for Policy Dialogue on Global Value Chains, Production Transformation and Development

At Leather Wings, a small shoe-making outfit based in central Kathmandu, four women sit in a small room cutting up bright red cowhide imported from India. Next door, a dozen of their colleagues stitch the shapes together on sewing machines. The owner Samrat Dahal says the boots, designed by a German expat, sell via the Internet in India, China and Italy.

The company, founded in 1985, sums up some of the issues facing the Nepalese economy: entrepreneurial leaders at the helm of a committed workforce making a competitive and quality product for which overseas demand is ample. The problem isn’t finding buyers; it’s scaling up production to meet that demand. Exports by the handful of players in Nepal’s shoe industry totalled only USD 23 million in 2015. The task of boosting production in Nepal is doubly pressing given that the country already meets the criteria to graduate from the least developed country (LDC) category, something that the government wants to happen as soon as 2022. Nepal’s productive capacity predicament is typical of many LDCs. Moving onto a path of long-term prosperity requires structural transformation that expands production via manufacturing, services and higher-productivity agriculture.

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